Monday, February 14, 2011

Business Secretary Vince Cable appeared on Andrew Marr's show yesterday for the first time since his wee spot of bother before Christmas. Unfortunately, Marr stuck completely to politics and didn't ask him about his spin round the dance floor with Erin Boag in the Strictly Christmas special, but Vince did have lots to say about the banks and the economy.

Vince was quick to say that this week's agreement with banks is "by no means a finished article" but was "helpful in getting the banks, including the private banks who are not owned by the state to make commitments in terms of lending to small and medium sized companies." Marr pushed him on the lending part of the agreement which he described as "pretty weak". Cable said that it was a two sided arrangement - banks have agreed to make more money available to SMEs and the Government is going to step back from threatening the banks with higher taxes." However, he did say that if the banks didn't play ball, then the Government would look at its relationship with them again. I would like to say I felt sure about this. If it were only Vince making the decision, I'd feel a lot more comfortable. I said the other day that I didn't think a 6% increase was enough to see the growth we actually need.

He did talk about the major changes to come in terms of "fundamental surgery" on the structure of the industry - getting more competition and separating off the retail and investment elements of the banking system.

On Matthew Oakeshott, described by Jonathan Calder on Liberal England as "widely seen as Vince Cable's representative on earth" all he would say that was that in "friendly discussions" with him, he'd suggested that the glass was "more half full than half empty" pointing to the fact that most of the major developments with the banks had taken place outside the Merlin agreement, citing the taxes and disclosure legislation on top earners.

Marr challenged him that he was not as tough on the banks as he used to be. Vince replied:

"I remain forthright - these are extraordinarily large bonuses which I think most people cannot understand. Let's be clear why we would object to enormous salaries in banking and not football. What is different is that banks are underwritten by the state, they have a state guarantee and that's why the enormous payments are so offensive. And in order to deal with that guarantee, and banks being too big to fail, we have to look at their structure and that's why the Banking Commission is crucial."

Marr pushed him about separating the casino banks from the everyday life banks and Vince acknowledged that this was part of the solution but that there also had to be more competition to give customers a better deal, for example small businesses paying such enormous margins.

Marr asked him if we'd notice the difference. Vince outlined 3 aims that he wanted to see: "banks more competitive, safer and not making large excess profits which fuel the bonus culture"

Asked about whether departing Egyptian dictator Hosni Mubarak's assets would be frozen as Switzerland had done, Vince said that he'd be worried if the banks had been involved in anything improper. He did say that one thing the Government had cracked down was "stopping the banks engaging in large scale tax avoidance on behalf of their corporate clients".

He said he didn't agree with the 91 Liberal Democrat councillors who had written to the Times to complain about the pace of the cuts. Vince said they did have a point about the need to reform local government finance to make it more genuinely local. A bit of an evasive answer, emphasising a small part of the letter

He also talked about launching major initiatives in terms of trade and apprenticeship to try and secure the economic growth we need.

All in all, Vince was in good form - the language may be more diplomatic than it once was, but the intent to deal with the banks is as strong as it was in opposition and he seems determined to see it through.

1 comment:

I too thought Vince was back 'on song'. One measure missing from Vince's list which he used to advocate was the re-mutualisation of Northern Rock. Lib Dems should be arguing for more mutuals in the finance sector to challenge the dominance of the present ownership model which is wedded to short-term profit.